USD/JPY Price Forecast: Seems vulnerable amid suspected JPY intervention, weaker USD

The USD/JPY pair attracts heavy intraday selling on Wednesday and dives to the 155.00 psychological mark, or the lowest level since February 24, though it lacks follow-through. Spot prices now seem to have stabilized around the 156.00 round figure during the first half of the European session, still down over 1.0% for the day.

The Japanese Yen (JPY) rallies across the board on the back of speculations of another suspected intervention by government authorities to prop up the domestic currencies. Reports of JPY intervention first came up last Friday after the USD/JPY pair surged past the key 160.00 psychological mark. In fact, market data suggests that Japan may have spent as much as ¥5.48 trillion ($35 billion) buying the JPY last week. Although officials have, so far, declined to confirm any action from Japan's Ministry of Finance (MOF), the price action strongly suggests that intervention once again occurred on Wednesday.

The US Dollar (USD), on the other hand, comes under intense selling pressure amid hopes for a US-Iran peace deal. US President Donald Trump said on Tuesday that “Project Freedom” – an operation to guide commercial ships out of the Strait of Hormuz – will be paused for a short period of time to see whether a deal will Iran can be finalized. Trump added in a post on Truth Social that great progress has been made toward a complete and final agreement with representatives of Iran. This follows earlier comments from Defense Secretary Pete Hegseth that the US was not seeking to re-escalate tensions with Iran.

Hegseth added that the US-Iran ceasefire holds for now. Furthermore, Secretary of State Marco Rubio announced that the US-led ‘Operation Epic Fury’ launched against Iran, jointly with Israel, on 28 February, is over. The comments fuel optimism about the end of hostilities and boost investors' confidence, undermining the USD's reserve currency status. Furthermore, sliding Crude Oil prices ease inflationary concerns and temper hawkish US Federal Reserve (Fed) bets. This is seen as another factor contributing to the offered tone surrounding the Greenback and the USD/JPY pair intraday slump of nearly 200-pips.

Meanwhile, the CME Group's FedWatch Tool suggests that traders are still pricing in over a 20% chance that the Fed will hike interest rates by the end of this year. The Bank of Japan (BoJ) also signaled last week that it stands ready to hike rates in the face of rising inflation. Traders now look forward to the release of the US ADP report on private-sector employment, which, along with speeches by influential FOMC members, would drive the USD demand. The focus, however, will be on the closely-watched US Nonfarm Payrolls (NFP) report on Friday. Apart from this, geopolitical headlines might infuse volatility across the global financial markets and produce some meaningful trading opportunities around the USD/JPY pair.

USD/JPY daily chart

Technical Analysis:

Spot prices showed some resilience below the 61.8% Fibonacci retracement level of the February-April upswing and bounced off the 200-day Exponential Moving Average (EMA) pivotal support near the 155.00 mark. The latter should act as a key pivotal point, which, if broken decisively, will be seen as a fresh trigger for the USD/JPY bears and pave the way for deeper losses.

Meanwhile, momentum indicators point to a cautious tone. In fact, the Relative Strength Index (14) sits near 37, edging toward oversold territory, while the Moving Average Convergence Divergence (MACD) remains below zero with a negative reading, hinting that bearish pressure is still dominant despite the proximity of trend support.

A clear break below the 155.00 mark will reaffirm the negative outlook and expose the 78.6% retracement at 154.06, ahead of a deeper floor near 152.27. On the topside, recovery attempts face first resistance at the 50% retracement at 156.46, followed by the 38.2% level at 157.45. A sustained move above these hurdles would be needed to challenge the 23.6% retracement at 158.67 and, beyond that, the recent cycle high area around 160.65.

(The technical analysis of this story was written with the help of an AI tool.)